On March 19, 2019, the Inter American Dialogue hosted an event titled “Buying Votes and Lining Pockets: Venezuela’s Petro-Diplomacy.” The panel was co-hosted by CONNECTAS, a Colombia-based investigative journalism platform, the National Endowment for Democracy, Transparency International, and the International Center for Journalists. The discussion featured opening remarks by Carlos Eduardo Huertas, director of CONNECTAS, followed by a panel discussion featuring Suhelis Tejero Puntes, a report for the Dominican Republic’s Diario Libre; David Gonzalez, investigative journalist for CONNECTAS; Zoe Reiter, acting US representative and senior project leader for Transparency International; and Miriam Kornblith, senior director for Latin America and the Caribbean for the National Endowment for Democracy. The discussion was moderated by Michael Camilleri, director of the Peter D. Bell Rule of Law Program at the Inter-American Dialogue, and Luis Botello, Deputy Vice President for New Initiatives and Impact at the International Center for Journalists.
Carlos Eduardo Huertas opened the event with some of the principal findings of CONNECTAS’ “#Petrofraude” report, which investigated the mismanagement of funds and corruption involved in the disbursement of funds through the Venezuelan Petrocaribe program. Begun in 2005 by Venezuelan President Hugo Chavez, Petrocaribe injected the equivalent of 28 billion dollars in petroleum to 14 beneficiary countries, with a majority of the money going to Nicaragua, the Dominican Republic, Jamaica, and Haiti. CONNECTAS’ investigation–undertaken in collaboration with four regional news organizations–revealed that these countries are still in many cases in billions of dollars of debt to Venezuela, with most of the reforms and projects ostensibly undertaken with Petrocaribe money unfinished or totally absent. The almost complete lack of oversight in the disbursement of funds meant that much of the money ended up lining the pockets of the countries’ political elite, reinforcing their diplomatic allegiance to Venezuela in international forums such as the United Nations and OAS.
— CONNECTAS (@ConnectasOrg) 20 de marzo de 2019
The panel discussion began with some more detailed accounts of the fraudulent disbursement of Petrocaribe funds from Puntes, who was part of the journalistic team for the report. She spoke about the investigations she carried out on the ground in Haiti. After the 2010 earthquake. Petrocaribe funds poured into Haiti, supposedly for hurricane relief, but promised aid projects were never completed: Puntes and her team visited over a dozen sites where they saw partially built or barely started projects for hospitals, affordable housing, and the like. On some plots the ground hadn’t even been moved. Meanwhile, projects favored by Haiti’s political elite–such as a football field ordered by former President Michel Martelly–were duly completed with Petrocaribe funds. “The resulting situation is one where people have a football field, but nowhere to live,” said Puntes. One egregious example of an unfinished project is the National Assembly building: the original was destroyed in the 2010 earthquake and, almost a decade later, its replacement–meant to be built with Petrocaribe funds–remains unfinished.
Kornblith added that another facet of the Petrocaribe agreement was the importation of basic agricultural products–often of somewhat low quality–from beneficiary countries, such as Nicaragua, in exchange for oil. These products–such as rice, beans, and other dietary staples for the Venezuelan people–were sold at arbitrarily below market prices to the Venezuelan people as part of Chavez’ socialist program, and not heavily produced in-country. This would lead to devastating shortages as Venezuela’s oil wealth began to decline with falling global oil prices and as producers refused to continue exporting at a loss.
Gonzalez continued by emphasizing that the investigation showed an absence of oversight mechanisms both within Venezuela’s oil authority–PDVSA, which was in charge of exporting the oil– and in the local partner organizations set up to manage the Petrocaribe loans, such as ALBA in El Salvador. In effect, organizations such as ALBA–which existed in each of the beneficiary countries–became arbitrary disburser of funds for the benefit of those in power, including for purposes such as real estate speculation.
Botello raised the question of how the funds were used to support political parties. Kornblith continued on that vein by saying that the corruption propagated by Petrocaribe’s financial support for political figures generated loyalties and complicities far deeper and more difficult to break than ideological ties, although they may be hidden behind an ideological veneer. Local leaders became constrained to support Venezuela because the latter knew the details of their corruption and illicit gains. The result of this support is manifested in voting in the Organization of American States, for instance.
Reiter emphasized that the malversion of many of these funds would be impossible without the use of shell companies in certain countries that laundered and possibly set up bank accounts to store the money. Lack of beneficial ownership disclosure requirements facilitates these grand corruption schemes, and more transparency on that front is essential to combating graft. Furthermore, local journalism in small island states is both underfunded and difficult to practice–often because of entrenched political corruption–but is absolutely essential to government oversight, as the #Petrofraude report shows. International aid organizations looking to fund anticorruption projects in the Caribbean should look to investigative journalism outfits working there.
The Q&A portion of the discussion included a question about the role of the private sector in facilitating these grand networks of corruption. Reiter answered that business elites in these countries are absolutely essential in maintaining those networks, and often don’t get targeted by grand corruption prosecutions. Furthermore, they lobby the US Congress very hard to avoid getting targeted by international sanctions such as the Global Magnitsky Act, which is perhaps the most powerful tool that the United States has in combating international corruption. Identifying and targeting the business elites in cahoots with corrupt political leaders is therefore key to attacking systemic corruption of the sort fomented by Petrocaribe.